Paul Krugman is in a channeling frenzy in today’s column, entitled “The Dwindling Deficit.” His inner Alfred E. Neuman says, ‘What, me worry?”:
The budget deficit isn’t our biggest problem, by a long shot. Furthermore, it’s a problem that is already, to a large degree, solved. The medium-term budget outlook isn’t great, but it’s not terrible either — and the long-term outlook gets much more attention than it should.
Who knew? He argues that economic recovery will raise federal revenues and decrease such costs as unemployment and food stamps. That’s usually true enough, except we’ve been in “recovery” since June 2009 and it hasn’t helped yet. Budget deficits for the last four fiscal years were $1.41 trillion (2009), $1.29 trillion, $1.3 trillion, and $1.08 trillion.
James Glassman, the executive director of the George W. Bush Institute and a Forbes contributor, has written a piece on the facts about budget deficits and how various presidents truly rank.
The inspiration for Glassman’s piece was a comment by former Governor Howard Dean, who was asked what specific policies in the Bush administration he thinks are still being used to explain an unemployment rate of more than eight percent. To which Dean responded, “The biggest ones are the deficits that were run up…. The deficits were enormous.”
All of which caused Glassman to do something that Dean did not: consult the facts in various economic reports. Here is the key paragraph:
As for spending itself, during the George W. Bush years (2001-08), federal outlays averaged 19.6 percent of GDP, a little less than during the Clinton years (1993-2000), at 19.8 percent and far below Reagan, whose outlays never dropped below 21 percent of GDP in any year and averaged 22.4 percent. Even factoring in the TARP year (2009), Bush’s average outlays as a proportion of the economy was 20.3 percent – far below Reagan and only a half-point below Clinton. As for Obama, even excluding 2009, his spending has averaged 24.1 percent of GDP – the highest level for any three years since World War II.
I would only add that under Bush the deficit fell to 1 percent of GDP ($162 billion) by 2007, the penultimate year of the Bush presidency.